CSR and Swachh Bharat Abhiyan

We smell itevery day, we see it every day,we are surrounded by waste generated by ourselves.The present Central Government with a view to clean the surroundings and maintain an ecofriendly atmosphere, which will lead us to a healthy lifestyle, introduced Swachh Bharat Abhiyan. The government has introduced several schemes and laws in order to make it a success yet there is no output available due to lack of implementation process and loop holes in the present schemes. This makes it impossible for the government to achieve the targets in the prescribed limit of time. Initiatives at local level and understanding Cleaning India Campaign as individual and civic responsibility will lead to effective and efficient output, whose proper method of implementation has not been proved effective. Rivers in India are major part of livelihood activities, cultural and spiritual insights. Three decades have been observed since the task of cleaning Ganga and other rivers throughout India are actually in books only. The rivers in many countries have been cleaned and transformed to a new beauty of tourist attraction. The principle of Polluter Pays has changed now a days to pay and pollute for the industries. Swachh Bharat Abhiyan and Clean Ganga Mission have been included as Corporate Social Responsibility (CSR) activities under Schedule VII of the Companies Act, 2013 from October 24, 2014. This was a major step in order to deal with the present problem of pollution and its measure.

This paper following a doctrinal research will focus on the present and futuristic scope of the Swachh Bharat Abhiyan at different levels of society and industries’ initiatives by means of CSR. Examining the present need and searching for alternatives it will draw a model for sustainable socio-economic growth of industries and people around the highly polluted rivers of India.

“We can no more gain God’s blessing with an unclean body than with an unclean mind. A clean body cannot reside in an unclean city.”

Mahatma Gandhi

The Swachh Bharat Abhiyan (Clean India Mission), launched on October 2, 2014 marks the beginning of the largest programme on cleanliness and sanitation by the Government of India till date. The programme aims to accelerate construction of toilets, solid and liquid waste disposal systems, Promotion of village cleanliness and provision of adequate drinking water supply to every person by 2019, three years ahead of the deadline set by Nirmal Bharat Abhiyan [NBA]3.

NBA will be restructured into the Swachh Bharat Mission with two submissions;Swachh Bharat Mission (Gramin/Rural) and Swachh Bharat Mission (Urban). The two missions will fall under the Union Ministry of Drinking Water and Sanitation (for RuralIndia) and the Union Ministry of Urban Development (for Urban India). Funding for these new initiatives will be throughbudgetary allocations, contributions to the Swachh Bharat Kosh and through commitments under Corporate SocialResponsibility (CSR). The proposal is for setting up of a Special Purpose Vehicle within the Mission as a Company under theCompany’s Act. It will raise funds from government and nongovernmentsources, including CSR funds. Public PrivatePartnerships (PPP) are also envisaged for the construction of Community Sanitary Complexes (CSCs).

Why Clean India?

The clean India programme is the need of the hour today. India is very soon to become the super power in Asia and a country needs to be well cleaned and equipped to cope up with the international standards. In order to sustain the high class living among different segments of people living in society it was a necessary to pay a greater attention towards cleanliness.

Other reasons are:-

A UN report in May had said that currently, nearly 60 percent of India’s population practice open defecation which puts them at risk of diseases like cholera, diarrhea, typhoid etc4.

Reports say that India is a gold medalist in open defecation and nearly 60 per cent of Indian population clear their bowels in the open. This 60 percent is roughly 58% of the people who practice open defecation all over the world.

India loses at least 1000 children a day to diarrheal deaths and the reason for these deaths is open defecation and lack of proper sanitation facilities.

As per reports, water of river Ganga is unsafe for bathing because it contains fecal coliform bacteria (120 times higher than the permitted levels) in large amounts and again the reason is open defecation in our country.

Poor hygiene and sanitation facilities costs India 600,000 lives annually because of diarrhea and not only this, lack of toilets expose one third of country’s women to the risk of rape or sexual assault.

India accounts for about 60 percent of the world’s residents without toilets, according to a report released in May by the World Health Organization and UNICEF.

Swachh Bharat’s connection with economic activity of the country: Advocating the idea of clean India, Prime Minister Narendra Modi had said, “The pursuit of cleanliness can be an economic activity, contributing to GDP growth, reduction in healthcare costs, and a source of employment.”

If India and its tourist destinations are clean, it will bring more people and will also bring about a paradigm shift in the country’s global perception. If proper hygiene and sanitation will not become a practice in our country then no one will be able to save the country from the health hazards and losses that will loom over the Indian populace in near future5.

CSR and SwachhBharatAbhiyan

Based on the Gandhian Principle of “trusteeship concept”. As business houses are run for profit maximization and are trustees of resources taken from society they are expected to return it back. CSR (Corporate Social Responsibility) is not at all a new concept in India it has being continued from log ago but in different names and under different shades. CSR is very important for sustainable development activities with its vast effect on the society at large. Proponents arguing for CSR see the long term profits for a company in this, while critics take it as a hurdle in the economic role of business. However the importance of CSR cannot be diluted.

With inclusion of Swachh BharatAbhiyan and Clean Ganga Mission, The Ministry of Corporate Affairs, Government of India notifying the provision of Section 135 of the Companies Act, 2013, Schedule VII of the said Act, and the Companies (Corporate Social Responsibility Policy) Rules, 2014 have come into force from 01.04.2014 for certain companies who fulfill the criteria as mentioned under Sub Section 1 of Section 135 to comply with the provisions relevant to Corporate Social Responsibility.

What Is CSR?

The term “Corporate Social Responsibility (CSR)” can be referred as corporate initiative to assess and take responsibility for the company’s effects on the environment and impact on social welfare. The term generally applies to companies efforts that go beyond what may be required by regulators or environmental protection groups6.

While proposing the Corporate Social Responsibility Rules under Section 135 of the Companies Act, 2013, the Chairman of the CSR Committee mentioned the Guiding Principle as follows:

“CSR is the process by which an organization thinks about and evolves its relationships with stakeholders for the common good, and demonstrates its commitment in this regard by adoption of appropriate business processes and strategies. Thus CSR is not charity or mere donations. CSR is a way of conducting business, by which corporate entities visibly contribute to the social good. Socially responsible companies do not limit themselves to using resources to engage in activities that increase only their profits. They use CSR to integrate economic, environmental and social objectives with the company’s operations and growth7.”

Corporate social responsibility is also called corporate conscience, corporate citizenship, social performance, or sustainable business. It is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms8.

Changes to the Companies Act

Companies having at least Rs 5 Cr net profit, or Rs 1,000 Cr turnover, or Rs 500 Cr net worth have to spend a minimum of 2% of their three year average annual net profit towards CSR from 2014-15. Schedule VII of Companies Act, 2013, lists the activities and endeavors that can count as CSR.

The Corporate Affairs Ministry has inserted the words ‘including contribution to the Swachh Bharat Kosh set up by the central government for the promotion of sanitation’ and ‘including contribution to the Swach Bharat Kosh set up by the central government for the promotion of sanitation’ in Schedule VII of the Act through a notification.

Earlier, contributions made to the Prime Minister’s National Relief Fund was also included under Schedule VII. Any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women was also included under the schedule.

Applicability

The companies on whom the provisions of the CSR shall be applicable are contained in Sub Section 1 of Section 135 of the Companies Act, 2013. As per the said section, the companies having Net worth of INR 500 crore or more; or Turnover of INR 1000 crore or more; or Net Profit of INR 5 crore or more during any financial year shall be required to constitute a Corporate Social Responsibility Committee of the Board “hereinafter CSR Committee” with effect from 1st April, 2014. The pictorial representation below gives the representation of Section 135 (1).

CSR and Swachh Bharat Abhiyan

The above provision requires every company having such prescribed Net worth or Turnover or Net Profit shall be covered within the ambit of CSR provisions. The section has used the word “companies” which connotes a wider meaning and shall include the foreign companies having branch or project offices in India.

CSR Committee

CSR Committee should consist of at least three directors out of which at least 1 director should be independent director. Some companies many not be mandatorily required to appoint independent directors as per provisions of Companies Act 2013 but CSR applicability may be there for those companies. How will this criteria of independent director be met in case of those companies need to be clarified.

Functions of CSR Committee:

Formulate and recommend to the Board, a Corporate Social Responsibility Policy, which shall indicate the activities to be undertaken by the company as, specified in Schedule VII of the Act.

Recommend the amount of expenditure to be incurred on the activities referred to in clause (a).

Monitor the Corporate Social Responsibility Policy of the company from time to time.

Prepare a transparent monitoring mechanism for ensuring implementation of the projects / programmes / activities proposed to be undertaken by the company.

Responsibility of the Board of Directors

To ensure that at least 2% of average net profit of last three preceding years is spent on CSR activities every year.

‘Net Profit’ shall mean, net profit before tax as per books of accounts and shall not include profits arising from branches outside India.

2% CSR spending would be computed as 2% of the average net profits made by the company during every block of three years. For the purpose of First CSR reporting the Net Profit shall mean average of the annual net profit of the preceding three financial years ending on or before 31 March 2014.

To approve the CSR Policy after considering recommendations of CSR Committee.

To disclose CSR policy and initiatives in Board’s report and Company’s website.

To ensure that activities reflected in CSR policy are actually undertaken by company.

If the company does not spend 2% of net profits as required, then Board to report the reasons in the Board’s report.

Activities covered under schedule VII of the Company Act 2013

Ministry of Corporate Affairs vide its Notification dated 27th February, 2014 has come up with the modified Schedule VII which covers wide range of activities which can be undertaken by the Companies as a part of their CSR initiatives.

Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects.

Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centers and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups.

Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art, setting up public libraries, promotion and development of traditional arts and handicrafts.

Measures for the benefit of armed forces veterans, war widows and their dependents;

Contribution to the Prime Ministers’ National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women.

Contributions or funds provided to technology incubators located within academic institution which are approved by the Central Government;

Rural development projects.

The above mentioned activities constitute the CSR activities and the companies which are covered under the provisions of Section 135 shall be required to carry out any one or more of the activities as specified above along with following its CSR Policy.

Drivers of Swachh Bharat Abhiyan (SBA) through CSR

Partners in business and consumers want to know what is inside a company. They want to do business with companies in which they can trust and believe. This transparency ofbusiness practices means that for many companies, corporate social responsibility, CSR,is no longer a luxury but a requirement. However, the challenge is to create a commonlyrespected CSR framework that would allow on detailed assessment of business practices. Basically, the drivers of CSR are the mix of incentives and risks directed at companies toimprove standards. These drivers are market-based, usually beginning when a firmanticipates or responds to a risk associated with the social, labor or environmental impactof a specific business practice9.

The mission of Swachh Bharat Abhiyan can very well be carried forward through three primary Drivers. The above mentioned concept of drivers has been explained through the help of pyramid given below10:

Economic Driver: These drivers are the back bone for cleaning the targeted area of the ward/district. Through this requirement the working condition of the mission can be made competitive. Here the consideration in the form of funds from the Government and Municipal Corporation can be pumped in for the purpose of successful completion of day to day work. In the present day condition following areas can be taken care of- company image/reputation, improved risk management, competitive advantage, pressure from investors etc.

Social Drivers: These drivers consist of socio-cultural awareness amongst the citizens of the targeted ward/district. Requirement and focused attitude of the NGO/CSOs which are working in that area contribute for drawing the policy on cleanliness. Any business entity can take the help of these stakeholders at the time of execution of work. Which include –license to operate, pressure from local communities, and demographic research of the targeted area.

Political Drivers: Both the state Government and Municipal authority has to play a key role in pushing forward this mission of Swachh Bharat Abhiyan (SBA) through their vision and guidance. Business entity which takes this challenge of cleanliness has to coordinate this skillful task with the help of economic, social and political backing.

Swachh Bharat Abhiyan and Companies Act

The integration of all this will lead to success it is a collective efforts and need the fulfillment of general interest neglecting all individual interests. The concepts of three ‘P’ People, planet and profit, are to be taken care of as the companies run for a profitable index of zenith. The investment for now will lead them to greater business profit margins for future as goodwill in market and the social welfare works also are a major factor in creating the brand image and maintain existence of product in the multi-segmented market of India, where trust and goodwill are major factors of success.

Conclusion

India’s business environment is very complex and the regulations are to be made in accordance with the future, so that it does not affect the economy but helps in establishing sustainability. The present PPP (Public Private Partnership) has more scope when the polluter pays for the pollutant created by him apart from CSR activities. Apart from this the following things are also to be considered:-

Emphasis to be given for green development oriented growth of society and business.

We the individuals have to take initiatives to keep our local surrounding clean in a small scale.

Most of the waste material are seen thrown outside the houses which could be seen in roads and dumping areas, avoiding it and using three ‘R’ (Reduce, Recycle, and Reuse) will ensure sustainability.

Education and awareness programme must be of weekly or monthly period as we have travelled a long way without it, which is impossible be covered within few days or hours of campaigns or by some pamphlets distribution.

The use of Social media for creating awareness must be maximized as we the people interact more trough social media and other electronic media.

The Ministry of Corporate Affairs have tried to achieve such a thing with the present CSR policy which is appreciable for greater contributions, although the results will determine the percentage. The Mission of cleaning Ganga and Swachh Bharat Abhiyaan are the major projects of the government and needs a lot of funding with the present framework which is expected to allocate the funds with the help of Private sector. It is an endless activity which needs to be taken care off. However the need for the CSR is now linked with these two initiatives will lead to the path of achievement of objectives. It would have been difficult for the government alone to look into the matters of sustainability and development with establishing equilibrium among the both. Also, as rightly mentioned by United Nations Industrial Development Organization (UNIDO), CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (“Triple-Bottom-Line- Approach”), while at the same time addressing the expectations of shareholders and stakeholders11.

Third Year Student, (B.B.A.LL.B. Hons.) Siddhartha Law College, Dehradun [↩]

Nirmal Bharat Abhiyan (NBA) previously called the Total Sanitation campaign (TSC) is a Community led total sanitation programme initiated by the Government of India in 1999. It is demand driven and people centered. [↩]